Kennedy Wilson closes Ireland’s largest CMBS buy

A joint venture led by US investor Kennedy Wilson has completed the acquisition of the matured Opera Finance CMBS portfolio consisting of 14 properties in Ireland.

Under the €306 mln deal, described as the largest single CMBS acquisition in Ireland in the current economic cycle, Kennedy Wilson and its partner will each contribute €60 mln of equity, while Bank of Ireland will provide €199 mln in financing. The transaction price represents a 28% haircut on the value of the original loan backing the assets.

The Opera portfolio was previously controlled by developer Treasury Holdings, currently in liquidation, and includes Stillorgan shopping centre, Merchant’s Quay shopping centre in Cork, KPMG's Dublin office and the Bank of Ireland headquarters.

The assets were previously managed by Real Estate Opportunities, a closed-ended investment fund majority owned by Treasury Holdings. REO financed the assets in 2005 with a €425 mln loan provided by Eurohypo (currently Hypothekenbank Frankurt) which a year later was securitised in the €375 mln Opera Finance CMBS, with the addition of €50 mln in junior debt. The debt fell due for repayment in February 2013.

Hypothekenbank Frankurt (formerly Eurohypo) appointed debt specialists Cairn Capital earlier this year to advise on the disposal process.

Mary Ricks, president and CEO of Kennedy Wilson Europe, noted that the package is ‘one of the highest quality portfolios to trade in Ireland in the current cycle’. The majority of the properties are located in Dublin 2 or Dublin 4 and only one asset is located outside of Dublin (in Cork). The rent roll is believed to be an annual €25 mln.

‘This transaction represents a further commitment on the part of Kennedy Wilson to the Irish market,’ commented Peter Collins, managing director of Kennedy Wilson Europe.

Beverly Hills, California-based Kennedy Wilson last year launched a €2 bn investment joint venture with a partner believed to be the European Commercial Real Estate Group of Deutsche Bank. The company and its partners’ real estate acquisitions in Ireland now total $1.2 bn.